With the four-year housing recovery in just the "fourth or fifth inning," the real estate market may take longer than expected to really fire on all cylinders again, said Doug Yearley, CEO of homebuilder Toll Brothers.

"Four years in, I would think the housing market would be further along. I think it means we're going to have a longer, slower recovery," he told CNBC's "Squawk Box" on Friday. He described the 2007 to 2011 period as the "worst housing depression we've ever seen."

While characterizing current housing conditions as "healthy," he said factors such as an improving economy and extremely low interest rates should be providing more juice to the real estate market.

"[But] we don't worry about the Fed raising rates as long as it's done intelligently and slowly," Yearley said, adding the real estate market can handle mortgage rates of 4.5 percent. "I'll take a 4.5 percent rate in a better economy any day."

Appearing with Yearley on CNBC, Home Depot Chairman and CEO Craig Menear said the housing market has been more robust this year than he had expected, and that's leading to additional residential renovation and improvement projects.

"We're getting a tailwind from the housing environment that helps our business in terms of home value appreciation and housing turnover. Those are two key drivers of projects," said Menear.

"Both of those have been a little bit stronger than how we thought about as we planned 2015," he said, estimating turnover at about 5 percent and appreciation 4 to 5 percent.

With housing doing better, Menear said homeowners see improvement as an investment rather than an expense, which makes them more likely to take on projects or hire contractors.

Millennials want suburban life later: CEOs

Besides talking about housing as it relates to the economy, both CEOs said the notion of the "death of the suburbs" has been greatly overstated.

"Certainly more and more people are living in cities. But [in] the American Dream when you settle down and your kid hits kindergarten, most people are moving to the 'burbs," said Yearley.

Millennials, loosely defined as people born in the early 1980s through the late 1990s, "absolutely want to buy homes" in the suburbs, Menear agreed, saying his company's research shows it's "just a delayed purchase."

The trend of young people shunning the suburbs in favor of the hustle and bustle of city life has been well documented in dire predictions about the "reurbanization of America" from real estate billionaire Sam Zell and others in recent years.

But Yearley said millennials are getting married later and having families later. "Therefore they're moving to the 'burbs later."

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